Mayoral candidates talk taxes, business and banking

A Humphrey School forum focuses on the city’s business and economic environment

Mayoral candidates at a June 6 forum included, from left to right, Aswar Rahman, Al Flowers, Mayor Betsy Hodges, City Council Member Jacob Frey (Ward 3), Nekima Levy-Pounds, Tom Hoch and state Rep. Raymond Dehn. Photo by Dylan Thomas

Seven of the candidates seeking the Minneapolis mayor’s office met Tuesday to discuss economics and the city’s business environment at the Humphrey School of Public Affairs on the University of Minnesota campus.

Star Tribune business columnist Lee Schafer and Professor Larry Jacobs of the Humphrey School moderated what was billed as a “conversation” rather than a debate between the candidates, and their questions touched on the relationship between business and City Hall, the impending municipal minimum wage ordinance and property taxes.

Invited to participate were Mayor Betsy Hodges, state Rep. Raymond Dehn, filmmaker Aswar Rahman, community organizer Al Flowers, former law professor and president of the Minneapolis NAACP Nekima Levy-Pounds, Ward 3 City Council Member Jacob Frey and former Hennepin Theater Trust CEO Tom Hoch. A mayoral candidate who wasn’t on stage, Jonathan Honerbrink, posted messages to Twitter while sitting in the audience at the 250-seat Cowles Auditorium, which was near capacity for the event.

Support from business

Schafer began the 75-minute conversation by asking the candidates if they were actively seeking the support of business owners and leaders for their campaigns. Most answered in the affirmative, including Hodges, who said a vital business community was “one of the reasons we’re doing well.” Frey said the record number of new business openings in Ward 3 were evidence his “collaborative work” with the business community was having an impact.

The only candidate to answer no, Flowers, said he was “seeking the support of the people this election,” adding that his focus was on “equity concerns” in the city. Levy-Pounds also mentioned disparities in her response, noting that Minneapolis businesses are disproportionately white-owned. Although she will seek support from the business community, she said, “I sometimes speak a truth that the business community doesn’t always want to hear.”

Dehn, too, noted that prosperity hasn’t been equally shared among Minneapolis residents and neighborhoods, adding that the city needs to do more to maintain and build a diverse workforce.

‘Deaf ears’

Schafer next asked the candidates whether they agreed with what he described as a widespread perception: that the collective voice of business “falls on deaf ears at City Hall,” that it’s hard to do business in Minneapolis and that some elected officials even view business as a “negative force.”

Levy-Pounds said she agreed with Schafer that “city government hasn’t been the most responsive to our business community,” prompting a follow-up question from Jacobs, who asked how improving that relationship fit into a campaign platform that calls for making the city a national leader in equity. Levy-Pounds said business played a “key part” in her push for economic justice, in part by changing hiring practices that she argued block qualified candidates of color from well-paying jobs.

Hodges agreed that Minneapolis is a “challenging environment” for business, and said that was why she introduced the Business Made Simple initiative in her 2014 State of the City address, calling for a streamlining of rules and regulations. But Hodges didn’t buy Schafer’s suggestion that City Hall was filled with “deaf ears,” adding, “disagreement doesn’t mean deafness.”

Jacobs asked Hodges about a specific instance when the business community felt they were not heard at City Hall — early in Hodges’ term, when she backed a proposed fair scheduling ordinance in her Working Families Agenda. Hodges pulled her support for the ordinance, which would’ve required employers to set employee schedules weeks in advance, after pushback from business owners. The mayor told Jacobs that was actually an example of the conversation in action.

“Pulling it off the table was listening,” she said.

Flowers again said he was focused on people over business, arguing it was the voices of people living on the North Side that had fallen on deaf ears. Flowers said the city was pushing to address crime downtown ahead of hosting the Super Bowl in February when its attention was needed elsewhere.

“The biggest issue in this city is about people dying,” he said. “… If you don’t fix that, then you’re going to have problems downtown forever.”

Hoch said the lead-up to this month’s introduction of a municipal minimum wage ordinance was a prime example of how City Hall ignores the voices of business, arguing that Hodges and a majority on the City Council had already made up their minds to support a wage hike before the city launched a series of listening sessions to gather community input. Picking up from Hoch, Jacobs then asked Hodges if that was the case.

Hodges acknowledged that this winter she came out clearly against an exemption for tipped workers in the minimum wage ordinance, but noted that other key provisions — including how quickly higher wages would be phased-in — were still being discussed by Council members.

Rahman said Minneapolis has a “done-to rather than work-with” attitude toward business, agreeing that the deaf ears allegation “rings absolutely true.” He said the drive to raise the minimum wage “steamrolled” over legitimate small business concerns.

Who pays for higher wages?

Schafer’s next question to the candidates asked them who, ultimately, would pay for a higher city minimum wage, adding that it seemed like “common sense” that a rise in wages would be accompanied by fewer hours worked and fewer jobs.

Dehn said “no one was freaking out” when the state’s minimum wage rose to $9.50 an hour for large employers last year from just $6.15 in 2013, adding that most businesses adjusted to the higher wages. He said both customers and businesses “will pay a little more” when Minneapolis wages increase and, when pressed by Jacobs, said $15 phased-in over multiple years was “really not a drastic change.”

Hoch, describing the passages of a citywide minimum wage ordinance as a certainty, said the city doesn’t know enough about the potential impacts of the change, but that it will be the next mayor’s job to make sure the new ordinance is enforced and to stay on top of the possible consequences.

Schafer noted that Levy-Pounds said last fall that even $15 might not be enough of a hike, and asked if the candidate had shared that view with business owners. Levy-Pounds responded by telling about a recent visit to the Herbivorous Butcher, a vegan restaurant, where an employee excitedly told her the business wasn’t waiting for the city to act to move employee wages toward $15.

“That, to me, is the kind of mentality we need from our business community,” she said.

Jacobs then joined in, noting that some businesses have warned the wage hike will be too costly, forcing them to close or relocate to the suburbs. Levy-Pounds said she agreed with Hodges, who had long supported a regional wage hike over the go-it-alone approach for Minneapolis, but said the city in this instance had to be a leader.

Frey said he went on record in support of a wage hike two years ago, and that the long debate leading up to a vote later this month helped to ensure “we’re going to do it right.” He predicted there would be no exodus of business from the city.

Jacobs noted Frey recently reversed his support of an exception for tipped workers in the minimum wage ordinance, which he now opposes, and wondered if that said something about his “consistency” as a politician.

“It’s difficult leading the way on some of this stuff,” Frey responded, adding that, until Hodges “flipped” her own position over the winter, there wasn’t clear support among elected officials for giving tipped workers $15 an hour.

Hodges predicted a “trough” following passage of the ordinance, all but a certainty later this month, but added, “On the other side, we will all be better off,” noting taxpayers make up the difference when workers are earning poverty wages.

Flowers described the municipal minimum wage ordinance as “the biggest ruse” of the election, predicting it “will kill a lot of small businesses” and ultimately hurt people of color. He said the city should tackle other equity issues, like access to affordable housing, before wages.

“Al called it a ruse; it’s also a trap,” Rahman said, arguing that many of the small businesses owned by and employing people of color won’t be able to afford $15 an hour wages. He described the push for a municipal minimum wage as “ham-fisted political opportunism.”

Banking relationships

Schafer next about the idea of Minneapolis opening a city-owned bank, an idea the City Council asked staff to study last year as council members were grappling with the city’s relationship with Wells Fargo. The council discussed ending that relationship over Wells Fargo’s role in financing construction of the controversial Dakota Access Pipeline.

None of the candidates expressed support for a municipal bank, with Levy Pounds describing the idea as “asinine.” She said she was more interested in the idea of opening a black-owned credit union in North Minneapolis.

Still, several candidates said they would use what leverage the city has to hold big banks accountable, including Dehn, who was critical of large financial institutions’ role in the check-cashing and pay day loan businesses that he said prey on some neighborhoods and “extract wealth” from residents.

Hodges dismissed the idea political litmus tests for the banks the city does business with, adding that the amount of cash Minneapolis has invested with Wells Fargo was “not enough to make a dent” in the bank if the city pulled its assets. But she said there were “legitimate questions to be asked” about Wells Fargo and the banking industry, adding that the city was doing just that.

Property taxes

Schafer’s final question to the candidates sought their opinions on the 5.5-percent property tax increase set in the city’s 2017 budget.
Rahman, noting that property taxes were up twice that over Hodges’ term, said the people who suffer the most with that level of increase are the people who have been suffering the longest.

But Dehn countered that the rise was “probably not as drastic as we’d like to think,” noting the devaluation of property and years of smaller property tax hikes that followed the 2008 financial crisis. He said property taxes contribute to the city’s rising rents, but added that lack of housing is another significant factor and that the city may need to consider property tax abatement or some other steps to hold rents steady.

Jacobs pressed Dehn to say how much property taxes would rise under his leadership if elected, and Dehn’s response noted that mayors have to weigh spending on city needs against the burden of taxes.

“My goal would be to limit property tax increases as much as possible,” Hoch, who took the question next, said. He compared the mayor to an orchestra conductor who has to balance out the players.

Frey agreed with Hoch’s characterization of property taxes as “the most regressive form of tax,” but said any discussion of rising property taxes had to acknowledge that the city’s tax base had expanded significantly in recent years, limiting the impact of a higher levy on individual property owners. Asked by Jacobs how he would balance spending needs against the impact of higher taxes on low-income families, Frey said his approach would be to ensure taxes were being used “efficiently.”

“With all due respect to Jacob, I’m not sure you’re living in the real world,” Levy-Pounds responded, drawing links between rising property taxes, higher rents and the gentrification she argued was “displacing” residents in some neighborhoods. She said she was “stunned” when she heard about the 5.5-percent hike for 2017.

Levy-Pounds asked why the city was holding onto hundreds of vacant lots when the city was facing an affordable housing crisis.

Hodges said the value she carried with her during budget debates was making sure that city resources were invested in residents and invested well. She noted that state cuts to Local Government Aid for Minneapolis had forced tough budget choices.

Flowers, arguing the city had “squandered” millions in federal dollars on the North Side — possibly a reference to the “Promise Zone” designation awarded during the Obama administration — argued against future property tax hikes.